The Role and Effectiveness of Audit Committees in UK Higher Education Institutions

Abstract

The aim of the project was to investigate corporate governance practices in UK higher education institutions (HEIs). Specifically, the project sought to examine the role and effectiveness of the audit committee in supporting what was initially conceptualised as financial leadership’ in HEIs. What makes a board, and its various committees, an effective mechanism is a key and recurring question, which has been raised in academic, practitioner and policymaking circles and is relevant to companies, public bodies, charities and universities alike. The case of the audit committee is often highlighted in practice and in the literature, since it is a central plank of any corporate governance structure, normally tasked with overseeing the financial, control, auditing and risk management aspects of the organisation. In the light of the rapidly changing and uncertain financial environment faced by UK HEIs, the role of the audit committee is critical in monitoring, advising and shaping the HEI’s direction, and its work and structure have been the subject of detailed guidance by the Committee of University Chairs (CUC), supplemented by developmental resources from the Leadership Foundation for Higher Education and accountancy firms. However, what has been missing so far is a comprehensive cross-sectional analysis of the audit committee’s actual structure and characteristics in UK HEIs and the impact this has on organisational outcomes, and a deeper understanding of the role and activities of the audit committee from the field. In terms of the practical direction adopted during the research and how the results are presented in the final report, this has cascaded into three sub-objectives that we have fully achieved; ie, to: (a) investigate the characteristics of the audit committee in UK HEIs (b) investigate HEIs’ level of public accountability and the likely impact of the audit committee on accountability and other organisational outcomes (c) explore the role and effectiveness of the audit committee in detail.